Markets edge higher as earnings keep coming

Dow gained 109, advancers over decliners almost 2-1 & NAZ was up 4.  The MLP index added 1 to the 236s & the REIT index rose 4+ to the 383s.  Junk bond funds were in modest demand & Treasuries saw more buying which reduced yields.  Oil was off chump change in the 75s & gold inched up 1 to 1981 (more on both below).

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Goldman Schs (GS), a Dow stock, posted profit below expectations amid write-downs tied to commercial real estate & the sale of its GreenSky lending unit.  Q2 profit fell 58% to $1.2B ($3.08 a share) on steep declines in trading & investment banking & losses related to GreenSky & legacy investments, which sapped about $3.95 from per share earnings.  Revenue fell 8% to $10.9B.  The company disclosed a $504M impairment tied to GreenSky & $485M in real estate writedowns.  Those charges flowed thru its operating expenses line, which grew 12% to $8.54B.  CEO David Solomon faces a tough environment for his most important businesses as a slump in investment banking & trading activity drags on.  On top of that, GS had warned investors of write-downs on commercial real estate & impairments tied to its planned sale of fintech unit GreenSky.  Unlike more diversified rivals, GS gets the majority of its revenue from volatile financial activities, including trading & investment banking.  That can lead to outsized returns during boom times & underperformance when markets don't cooperate.  Results were mixed.  Fixed income trading revenue fell 26% to $2.71B, just under the $2.78B estimate.  Equities trading revenue was essentially unchanged from a year earlier at $2.97B, easily topping the $2.42B estimate.  Investment banking fees fell 20% to $1.43B, just below the $1.49B estimate.  The stock rose 3.22.
If you would like to learn more about GS, click on this link:
club.ino.com/trend/analysis/stock/GS_aid=CD3289&a_bid=6aeoso5b6f7 

Goldman Sachs misses on profit after hits from GreenSky, real estate

Carvana (CVNA) has reached a debt restructuring agreement that will reduce the used car retailer's total debt outstanding by more than $1.2B, the company said.  CVNA said the agreement will eliminate over 83% of its 2025 & 2027 unsecured note maturities & lower its required cash interest expense by more than $430M per year for the next 2 years.  In a separate public filing, the company said it will sell up to $1B in shares as it attempts to raise capital & restructure its operations.  “This transaction significantly increases our financial flexibility by reducing our total debt, extending maturities, and lowering near-term cash interest expense as we continue to execute our plan of driving significant profitability and returning to growth,” CFO Mark Jenkins said.  CVNA said its restructuring agreement covered roughly $5.2B of senior, unsecured bonds & included Apollo Global Management, its largest bondholder.  Under the terms of the deal, creditors will get new secured notes.  The company's long-term debt to end Q2 was $6.5B, slightly lower than nearly $6.6B to end last year.  That represented a majority of its total liabilities of nearly $9.3B to end Q2.  The company has been working on such a deal for more than a year as the stock went into freefall due to a heavy debt load & improper management during the coronavirus pandemic.  The stock soared 16.08 (40%).
If you would like to learn more about CVNA, click on this link:
club.ino.com/trend/analysis/stock/CVNA_aid=CD3289&a_bid=6aeoso5b6f7

Carvana shares jump more than 30% on deal to reduce debt by $1.2 billion

Morgan Stanley (MS) posted Q2 earnings & revenue that topped expectations, helped by record wealth management results.  EPS declined to $1.24 a share, on lower trading results from a year ago & a round of layoffs that triggered $308M in severance costs.  Revenue climbed 2% to $13.46B.  Under CEO James Gorman, MS's reliance on wealth management has helped its steady earnings & boosted its valuation relative to peers.  Gorman, who took over the firm in 2010, said in May he was preparing to step down within a year, setting off a succession race at the powerhouse.  Despite lower market levels that caused some fees to dip from a year ago, Q2 wealth management revenue rose 16% to $6.66B on higher interest income, exceeding the $6.5B estimate.  The division took in $90B in net new client assets.  The bank's financial division fared less well.  The institutional securities business posted an 8% drop in revenue to $5.65B, driven by declines in trading.  While equities trading generated $2.55B in revenue, topping the $2.37B, fixed income produced $1.72B, which was well below the $1.99B estimate.  Investment banking revenue of $1.08B was roughly unchanged from a year ago & essentially matched expectations.  The stock rose 1.16.
If you would like to learn more about MS, click on this link:
club.ino.com/trend/analysis/stock/MS_aid=CD3289&a_bid=6aeoso5b6f7

Morgan Stanley beats estimates on record wealth management revenue

Gold futures ended flat, a day after settling at their highest since early Jun.  Slower inflation, higher gold prices might seem an odd headline to anyone who believes precious metals need the cost of living to rise for the bullion market to jump.  However, interest-rate expectations matter much more right now, & after testing the floor at $1900 3 weeks ago, gold has shot higher on the sudden switch from higher-for-longer to peaking-sooner-than-later.  Gold for Aug settled at $1980 an ounce, the same finish as yesterday, which marked the highest since Jun 6.

Gold Futures Settle Unchanged, Holding at a 6-Week High

Oil futures settled lower, giving up early gains after the Energy Information Administration reported a smaller-than-expected weekly decline in US crude supplies.  Oil prices were somewhat subdued given some concerns about the global economic outlook.  If demand holds up, there be significant drawdowns in both oil & product inventories.  However, a rebound in the $ is tempering enthusiasm as the market tries to judge what the Federal Reserve's next move is going to be after softer housing & inflation data seem to suggest the rate-hike cycle may soon peak.  West Texas Intermediate crude for Aug fell 40¢ (0.5%) to settle at $75.35 a barrel.

Oil Futures Give Up Early Gains to Finish Lower

Stocks have risen for 8 straight trading sessions.  This is the longest winning streak in nearly 4 years.  Expectations are that rate hikes will end after next week.  The Dow chart below suggests that this rally is overbought.  It looks like profit taking is overdue.

Dow Jones Industrials